Zero Interest Credit Cards - What You Need To
Know
Zero interest credit cards can be a great deal, but you do have
to be careful and understand exactly what you are getting into
before you apply. For a good summary of the potential pitfalls and
rewards of zero-interest credit card offers, check out
http://www.bankrate.com/brm/news/cc/20020430a.asp. Not all
offers are necessarily good for your personal situation, and just
because you have received a ‘pre-approved’ offer doesn’t mean you
will actually be approved for zero interest.
Often, zero interest credit card offers are mailed out fairly
indiscriminately, but then when it comes to actually underwriting
the applications sent in response, the lender becomes very
scrupulous. You may receive a card without the teaser zero interest
rate instead. You might even be turned down even though you received
a ‘pre-approval’ letter.
Pay attention to the zero interest credit card terms and
conditions. Is the zero interest rate available on purchases and
balance transfers, or only on one or the other? How long is the
introductory rate in effect, and what does the rate become after the
zero rate expires? Is there a balance transfer fee or an annual fee?
Are there any hidden fees such as application fees or credit
insurance requirements?
Zero interest credit card offers usually require very good
credit. If you have been transferring a balance around to various
zero interest offers for some time, chances are your credit is no
longer stellar and you might be much better off to just work on
paying down you balance on the card you currently have.
A number of websites allow you to compare zero interest credit
card offers along with their terms and conditions, side by side, so
you can more easily judge which, if any, are a good deal for your
particular situation. A useful site that offers this feature is
Apply For A Credit Card Now.com .
For an in depth analysis of credit card company abuses including
deceptive zero interest credit card deals and other controversial
but common credit card companies, check out the following PBS
transcript from the show Frontline:
http://www.pbs.org/wgbh/pages/frontline/shows/credit/interviews/mierzwinski.html
Zero interest offers are sometimes sent out to purposely snare
people with high debt-to-income ratios so the credit card company
can collect a balance transfer fee of as much as 3%. On a
transferred balance of $8000, that’s $240 in fees just to get the
zero interest rate for six months. So it isn’t as though you are
getting something for nothing. Then, as if that isn’t enough, if you
fall behind on other cards or make a late payment on a completely
unrelated debt, your new credit card company can drop your zero
percent introductory rate and charge an even higher interest rate
than the card you just left behind.
In other words, you really have to think your situation through
and read all the fine print before you jump at a zero percent
interest credit card offer. If you already have great credit, such
cards can be worth the switch. If you are looking for a way to pay
down a balance that is already causing you some pain, you may
actually be better off in the long run to get some credit counseling
and just pay off your debt.
|
